Our latest monthly forecast is published today (free registration required). The most noteworthy change is a significant upgrade to US GDP growth in 2011, from 1.5% to 2.2%. This pushes our outlook for world growth next year up slightly, from 3.7% to 3.8%.

The extension of the Bush-era tax cuts and unemployment benefits will boost demand in the US by half a percentage point in 2011. However, growth will remain subdued compared with what is normal for this stage of a recovery, and short of the pace needed to reduce the stubbornly high unemployment rate.

Although the new stimulus is the result of a welcome outbreak of bipartisanship, it is only a bipartisan agreement on how to spend borrowed money. With a fiscal deficit estimated at 8.9% this year, the continued lack of clarity on bringing government finances back onto a sustainable path could, eventually, lead to global financial markets questioning the security of US Treasury bonds.